The SEC has approved a combined investment adviser registration procedure for related fund managers. Using this procedure eliminates the need for each related fund manager to file its own investment adviser registration. The advisory activities of each manager included in the filing will be subject to the Advisers Act and the rules thereunder, and subject to examination by the SEC.
Under this procedure, one fund manager files the ADV, and the other related managers are included in the filing. A group of fund managers under common control that satisfy the following conditions can use this procedure:
- Manages only private funds and specified types of accounts. The filing manager and each manager included in the ADV advise only private funds and separate accounts that are qualified clients (as defined in Advisers Act rule 205-3) and are otherwise eligible to invest in the private funds advised by the filing fund manager or a related fund manager included in the filing. Also these accounts need to pursue investment objectives and strategies that are substantially similar or otherwise related to those private funds.
- Only “associated persons” are subject to the filing. Each related fund manager included in the filing and its employees and the persons acting on its behalf are subject to the filing fund manager’s supervision and control.
- Only a U.S. fund manager can be the filing fund manager. The filing fund manager has its principal office and place of business in the United States. Related fund managers included in the filing do not need to be based in the United States.
- Each manager is eligible to file. The filing fund manager and each related fund manager included in the filing need to have sufficient assets under management, or otherwise qualify to file with the SEC.
- Single compliance manual. The filing fund manager and each related fund manager included in the filing operate under a single code of ethics and a single set of written policies and procedures.
- One CCO. The filing fund manager and each related fund manager included in the filing have the same Chief Compliance Officer.
- Filing procedure. If the fund managers meet these conditions, then one of the fund managers will file the ADV. The filing fund manager needs to disclose in the Form ADV (Miscellaneous Section of Schedule D) that it and the other related fund managers included in the ADV are together filing a single Form ADV in reliance on the position expressed in the SEC letter and identify each related fund manager included in the filing by completing a separate Section 1.B., Schedule D, of Form ADV for each related fund manager included in the filing and identifying it as a “(relying adviser).”
When available, this procedure will simplify the investment adviser registration process, as well as annual amendments.
The SEC letter indicates that the same procedure can be used in filing Form PF.
Fund managers may be required to register individually if they fail to satisfy these criteria.
This guidance is contained in a response to the ABA dated Jan. 18, 2012. The SEC’s response also includes discussion of issues related to registered advisers that set up affiliated special purpose vehicles to manage their funds.
We understand that the staff of the SEC is currently considering similar issues concerning exempt reporting advisers.